House buying questions

[MushyMushy]

DH and I are talking about buying a house and paying cash for it. I want to know if this sounds like a good idea.

The house is small, but big enough for my family (3 bedroom/2 bath). We were talking about living in it, and putting the money we'd normally pay on a mortgage into savings. We'd fix the house up, and try to sell it for a profit. Or rent it out -- in our town, decent rentals are so hard to come by, so I'm 99.9% positive that we would have renters.

We would live in it until I could find a teaching job, which would probably be a year or two.

Anyway, what kind of advice can you give? I'm going to make an appointment to see this house sometime this week. What should I be looking for? What questions should I ask the realtor?

 

[bbmommy]

DH and I are talking about buying a house and paying cash for it. I want to know if this sounds like a good idea.

The house is small, but big enough for my family (3 bedroom/2 bath). We were talking about living in it, and putting the money we'd normally pay on a mortgage into savings. We'd fix the house up, and try to sell it for a profit. Or rent it out -- in our town, decent rentals are so hard to come by, so I'm 99.9% positive that we would have renters.

We would live in it until I could find a teaching job, which would probably be a year or two.

Anyway, what kind of advice can you give? I'm going to make an appointment to see this house sometime this week. What should I be looking for? What questions should I ask the realtor?

Sounds like a good idea. I have always had a mortgage, so if you can do it without and save money rather than rent I think that would be great, maybe some others can give advice.

 

[rentayenta]

We have never bought a house, always built our own but these are a few of the questions that our buyers have been particularly interested in:

Roof, how old, leaks?

Water damage anywhere, this is HUGE!

Flooding of any type, especially if there is a basement.

Neighbors. Find out about your neighbors as far as sex offenders and such. This is especially important if you have children.

Resale values in the neighborhood. Are people making money? Property values, rising?

School boundaries.

Any code and covenants for fences, exterior etc,.

Home warranty? Is there one? If not have them get you one.


I am sure there are more but that's all I can think of right now.

 

[kendall]

Sounds like a good plan to me - why pay interest to someone else when you can invest your own savings, grow your own interest, plus own your own home. The money you invest now and earn interest on will compound over time and be a nice investment over your lifetime.

 

[annegal]

But wouldn't you be taking $$$ out of Investments to buy the house? Same difference. I'd talk to a financial advisor about this.

 

[MushyMushy]

But wouldn't you be taking $$$ out of Investments to buy the house? Same difference. I'd talk to a financial advisor about this.

No, it's from a small inheritance. We were originally thinking about using it as a down payment for a nicer house, but then we got to thinking about how nice it would be to just get a cheaper/older/smaller home and not having any mortgage at all!

 

[hlbtimes2]

Are you currently paying a mortgage? If so, how would effect your income tax? I know we benefit greatly from having that deduction to itemize every year. I would probably talk to a financial advisor to work out if it would be better to invest the money in a house or an investment account. They'll be able to tell which is best at your income level.

 

[Sherri]

No, it's from a small inheritance. We were originally thinking about using it as a down payment for a nicer house, but then we got to thinking about how nice it would be to just get a cheaper/older/smaller home and not having any mortgage at all!

Watch flip this house on bravo, its amazing the profits the be made on fixer uppers. I say if you can do it then you should go for it. Since you will be living in it, you won't be under pressure to sell. You are in a win win situation.

 

[iloveboardwalk]

If you plan on "flipping" make sure you are buying a house which actually priced below market value. Professional flippers are nothing like most of what you see on TV. Although, the original "Flip This House" with Richard what's his name is pretty good.

Get a Realtor who knows that contract in your state, know your rights.

.....and one who has extensive experience in investments.

Get a good, licensed home inspector.

 

[honeymom]

Definitely talk with a financial counselor about what you are proposing. While not having a mortgage seems attractive, sometimes the tax deduction for the mortgage interest provides a better bottom line. A good counselor should be able to look at your overall financial picture and show you how to make the most money.

 

[minkydog]

Funny, my DH had the same idea, except he wants us to move into our RV and camp by the lake. Can you see the 5 of us, plus my gigantic poodle in a 20ft trailer I would need some serious drugs. Not gonna happen.

 

[dreamcometrue]

ask about the roof, ask how old it is. And about the plumbing. Has it ever been redone? Go around and turn faucets on...if it takes a long time for the water to get warm, it's old plumbing.

We basically did the same thing. We didn't pay cash for our old house, but we bought it in 1997. We built our current house and moved last July and instead of selling our old house, we were able to refinance it, take a huge chunk of $$ out of it (the price of the house had increased from $180,000 to $550,000) and basically have the same mortgage in the new house, which is MUCH MUCH bigger! We aren't making a whole lot from the rent, maybe $100 a month, but the tax write off is great! We are thinking about buying another home and renting it out!

 

[ducklite]

Is your cell still the same? I'll call you later about this if you want. I've got a lot of advice and knowledge, but am too lazy to type it all out.

Anne

 

[MushyMushy]

Are you currently paying a mortgage? If so, how would effect your income tax? I know we benefit greatly from having that deduction to itemize every year. I would probably talk to a financial advisor to work out if it would be better to invest the money in a house or an investment account. They'll be able to tell which is best at your income level.

No, we're not currently paying a mortgage. We've been renting, which was our plan for the time that I was in school -- we just didn't realize I'd be in school for as long as I was! But thanks for the heads up on that. I'll have DH talk to the financial adviser he knows.

Funny, my DH had the same idea, except he wants us to move into our RV and camp by the lake. Can you see the 5 of us, plus my gigantic poodle in a 20ft trailer I would need some serious drugs. Not gonna happen.

Oh no! How was that going to work??? Hey, there's a thought. We could buy a big old RV, homeschool the kids, and be nomads.

ask about the roof, ask how old it is. And about the plumbing. Has it ever been redone? Go around and turn faucets on...if it takes a long time for the water to get warm, it's old plumbing.

We basically did the same thing. We didn't pay cash for our old house, but we bought it in 1997. We built our current house and moved last July and instead of selling our old house, we were able to refinance it, take a huge chunk of $$ out of it (the price of the house had increased from $180,000 to $550,000) and basically have the same mortgage in the new house, which is MUCH MUCH bigger! We aren't making a whole lot from the rent, maybe $100 a month, but the tax write off is great! We are thinking about buying another home and renting it out!

The whole renting idea really appeals to us. We know a few people who have bought rentals, and then ended up with a few houses to rent in retirement.

I've got another stupid question. This one house we're going to look at is with one realtor. I saw another house online through another realtor. Can the buyer shop around with realtors or is that not a good thing to do? Should you stick with one?

I've said before, we live in a small town and we only have a few realtors.

 

[MushyMushy]

Is your cell still the same? I'll call you later about this if you want. I've got a lot of advice and knowledge, but am too lazy to type it all out.

Anne

I'm not sure -- I PM'd it to you, though.

 

[golfgal]

Definitely talk with a financial counselor about what you are proposing. While not having a mortgage seems attractive, sometimes the tax deduction for the mortgage interest provides a better bottom line. A good counselor should be able to look at your overall financial picture and show you how to make the most money.

It is VERY rare that the tax savings on a mortgage ever outweighs not having a mortgage at all. Say your property taxes are $10,000/year, a PORTION of that is deducted from your income taxes. Say your mortgage is $1000/month, you are $200+ in the hole because you have spent $12,000 in mortgage payments. It is always a good idea not to have a mortgage if you can because you are paying interest on the loan where if you are saving money you are earning interest.

If you have a mortgage the tax deduction is nice though.

 

[Galahad]

It is VERY rare that the tax savings on a mortgage ever outweighs not having a mortgage at all.

Exactly!

 

[oxfordcircus]

Watch out for asbestos in the attic insulation, pipe insulation and dry wall and in the furnace, fire brick, floor tile, acoustic tile and probably some other places.

 

[mickeyfan2]

Also watch for lead paint.

 

[Tazicket]

DH and I are in the process of getting our first house. I can tell you that one of the big things we considered in houses was the crime stats for the area. (This may not be as much of a factor for you depending on how big your city is- we're in a large one). There were several really cute houses that we passed by b/c the crime stats for the area were horrendous.